Most of us realize that wealth/cash can be created faster with the creation or investment of a business. Obviously Mark Zuckerburg is better off working on his business than working on passive real estate investments.
So has anyone started an active business or invested in alternative businesses to build wealth/funds faster than your current passive/semi-passive real investments? Example would be like a construction company or service oriented company that would require more hours/week. Out of curiosity, let me know what you do, how many hours you put toward that business, possibly the ownership structure, income, etc.
When I was underwriting SBA loans at my old job, I was able to look at HUNDREDS of different small businesses and analyze their financials and tax returns. Everything from hotels, tool and die shops, doctors, salons, gas stations, restaurants, car dealerships - you name it. It was a golden opportunity to see how a lot of different small businesses worked and which ones made the most money with the least amount of overhead.
One type of business that always surprised me was grocery stores. I saw a couple that were similar in size to a Kroger, and a few that were even smaller and resembled Aldi. Every one I looked at made a surprising amount of net income each year. I remembered thinking, if I ever have a quarter million in the bank and don't know what else to do with my time, THAT will be my next move.
The thought has crossed my mind a few times, but given how much time I spend on my existing businesses right now (and how active a grocery store would be), it's probably not a wise move for me right now.
@retipsterseth, I'm curious if this is true, but I suspect that in looking at financials for all those different business types, there were probably not more than just a couple, at most, that would provide comparable rates of return as most forms of real estate investing in general, and especially land flipping in particular. I mean I would be surprised if many business models with a brick-and-mortar component could compete on an IRR basis. Very successful online businesses, and particularly those selling digital products (ebooks, training/courses, SaaS, etc.) could far exceed real estate, I'm sure, but I would also guess there are probably a lot more strike-outs in digital products than in land deals which have undergone the appropriate due diligence.
@dl7573 - yeah, every business has its set of strengths and weaknesses. Land clearly has the highest ROI of anything I've seen to date, and the competition is still very low. At the same time, vacant land isn't infinitely scalable, and it's ultimately not a product everyone wants or needs (as opposed to a grocery store, where everyone needs to buy food and general merchandise, it's just a question of whether they'll buy it from you or your competitors... of which there are many).
An online business definitely has huge advantages in its scalability and low overhead in the beginning, but as things grow, the overhead absolutely grows with it, there is usually some form of competition out there. Not to mention, most people want and expect things for free these days, so if you expect anyone to pay you for anything, you'd better be offering something remarkably valuable while also proving that you're trustworthy and reliable.
I've never seen a business that didn't have huge challenges to deal with, it's just a question of what those challenges are and how well the business owner can deal with them.